What are the differences between wrongful dismissal and unfair dismissal?

Wrongful dismissal and unfair dismissal are two different concepts. It is important to know and understand which applies to you.

What is unfair dismissal?

To claim ordinary unfair dismissal, an employee must have two years’ continuous service with their employer.

To establish a claim for unfair dismissal, the employee will have been dismissed, with or without notice, and:

  • the reason for dismissal is not one of the statutory fair reasons; or
  • the reason for dismissal was for one of the statutory fair reasons, but the employer acted unreasonably in deciding to dismiss for that reason; or
  • the process the employer followed was unfair.


What are fair reasons for dismissal?

The statutory fair reasons for dismissal are:

  • capability or qualifications
  • conduct
  • redundancy
  • a statutory requirement (e.g. holding a driving licence)
  • Some other substantial reason.

In some circumstances there may be a different but ‘substantial’ reason for dismissal, which may be capable of being fair, such as a serious breakdown of trust and confidence between employer and employee. However, this will depend on the unique facts of the case.

If an employee is dismissed for one of the above reasons, the starting point will be that the dismissal was fair. If they were not dismissed for one of these reasons, their dismissal will be deemed unfair.

What counts as an employer acting unreasonably when deciding to dismiss?

The second area which can give rise to a claim for unfair dismissal is where the employer’s conduct was not ‘fair and reasonable’ in the circumstances, taking into consideration the size and resources of the employer.

There are several factors to be considered, but ultimately will turn on whether dismissal was a reasonable option.

What is a fair process?

There is an ACAS Code of Practice for dismissals. It includes provision for:

  • an initial informal disciplinary procedure
  • carrying out a thorough and fair investigation to establish the facts
  • resolving things quickly / acting promptly
  • allowing the employee to have a fair chance to state their case and allowing them to have support during the process
  • giving an employee a right to appeal any decision.

It is a legal requirement to follow the ACAS Code in certain circumstances, and if these apply, this will be considered by any employment tribunal that must subsequently decide whether the dismissal was fair.

The Code does not apply to redundancy but is regularly followed by employers who see it as reflecting best practice.


Financial awards in unfair dismissal claims

There is a set formula for calculating any unfair dismissal financial award. It includes a basic award, calculated by reference to age, length of service and salary (subject to a cap).

At the time of writing (Summer 2022) the maximum basic award stands at £17,130.

There is also provision for a compensatory award, which is subject to the lesser of; a maximum of one year of an employee’s gross pay or £93,878.

What is wrongful dismissal?

Wrongful dismissal relates to a breach of contract, and the failure to pay an employee the correct amount of notice. Because wrongful dismissal claims are contractual, it means the employer has a higher threshold to meet to defend the claims, often making them easier for employees to win.

The key difference between the two types of dismissal is that unfair dismissal is a statutory right under the Employment Rights Act 1996 and capped at a year’s pay/ £93,878. Wrongful dismissal is a contractual right and limited to the notice period.

With wrongful dismissal there is no requirement for an employee to have a set period of continuous service. They can also bring a claim from day one of their employment.

For either unfair dismissal or wrongful dismissal, a claim must be brought in a tribunal within three months (less a day) from the date of the employee’s dismissal. However, an employee may be able to bring a claim in the civil court for wrongful dismissal only and take advantage of the applicable six-year limitation period.

An employment tribunal can award up to £25,000 for a wrongful dismissal claim, whereas the civil courts can award more.


Getting professional help with a dismissal case

If you find yourself in a position where you must bring a wrongful or unfair dismissal claim, seeking legal advice is a sensible step towards seeking a fair resolution.

At Springhouse, our team of experienced employment law solicitors can help. Our extensive expertise in handling dismissal claims allows us to provide clear and targeted advice if you have been unlawfully dismissed and meet the correct criteria.

We can also help you to bring a claim to tribunal, should you have a strong case that has not been resolved.

For a discussion about your circumstances, get in touch with the team today.


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